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5 million will cut back on home, travel, or car insurance to cut costs

24 February 2009 / by Rachael Stiles

Five million Brits who are struggling to make ends meet at the moment are considering cutting back on costs such as home, travel and car insurance over the next 12 months, LV= has found.

More than one million people have said that they will be reducing the amount of insurance cover they have because they simply cannot afford it.

The insurer revealed that as many as 2.2 million British households will reduce or cancel their home insurance policies – the most likely expense to be cut.

Flood risk insurance is the element of home cover which is most likely to be cut, with 29 per cent of people saying that would be the first to go, despite the fact that the bad weather of the last few years has seen the number of claims rise considerably, and reach an average cost of £17,000 per claim.

"Home contents insurance is not legally required but anyone who has suffered a flood, or break in will know how important it is to have cover in place", warns John O'Roarke, managing director of LV= general insurance, "as if you do have a problem and you don't have cover, the costs often run into many thousands of pounds."

Car insurance is another potential area for saving money for 37 per cent of respondents who said they would be cutting back on insurance this year.

Many drivers will be downgrading, but LV= urges those who plan on cancelling their policy to bear in mind that car insurance is a legal requirement, and to be found driving without it can result in a fine, disqualification, and the vehicle being seized and crushed.

Brits have also said that they will be cutting back on travel insurance to try and cut the costs of their holidays this year, with 22 per cent intending to reduce or cut their cover when they travel.

LV= encourages travellers to rethink not taking valuable protection with them when they go on holiday as it is "extremely cost effective" compared, for example, to the cost of an air ambulance back to the UK at around £16,000.

Mr O'Roarke commented: "Travel insurance is extremely important if you are going abroad, and compared to the cost of an average holiday, it is a very small expense, that could save you tens of thousands and a lot of heartache in the long run."

Britain's pets can also expect less protection than they are used to, with 18 per cent of pet owners thinking about saving money by cancelling their pet insurance policies.

But this could also prove to be false economy, LV= says, as the minimal cost of pet insurance, around £10 a month, pales in comparison to the potentially huge costs of treating a pet for a broken leg or some other ailment.

"It's understandable that people are looking to ways in which they reduce their outgoings," said Mr O'Roarke, "however cancelling or reducing essential insurance cover could result in many people finding themselves seriously out of pocket if something untoward happens."

He continued: "I would just urge those looking to save a few pounds to consider the wider implications of leaving themselves without valuable insurance cover this year, as it is at time likes these, when money is short, that insurance becomes evermore important."